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China's Geely outlines ambitious Volvo plans

AFP/The Local · 14 Sep 2010, 08:04

Published: 14 Sep 2010 08:04 GMT+02:00

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The Chinese carmaker completed the purchase of the struggling Volvo from US auto giant Ford last month -- and now chairman Li Shufu is looking to cash in on his investment by selling up to 300,000 cars a year in China alone.

"Our challenge is to get Volvo out of trouble," Li said in an interview with the Wall Street Journal.

"From my perspective, Volvo's product is already in very good demand and the company is profitable," he told the newspaper. "Our real challenge is how we are going to evolve and develop the Volvo brand further."

Geely paid $1.5 billion for Volvo, and said last month it also would invest a total of $900 million in the brand, known for its sturdy, family-friendly vehicles.

Li said he hopes to build three Volvo assembly plants in China that would produce up to 300,000 autos a year -- all to be sold in the Asian nation, which overtook the United States last year to become the world's top auto market.

Volvo sold about 335,000 cars worldwide last year, so Li's plan would mean a near-doubling in sales. Building the three factories will require central government approval.

Li confirmed in the interview that Geely and Volvo were looking at factory sites in Shanghai and the southwestern city of Chengdu. The third plant could be in the northeastern city of Daqing, Li told the paper.

Manufacturing plants in Sweden and Belgium will be maintained, the company said last month.

Story continues below…

Volvo sold just 24,000 cars in China in 2009, and Li says he knows he needs to boost the brand's "sophistication" to match up with competitors Mercedes and BMW, perhaps by developing new luxury models.

If Volvo increases production in China, it could expand its presence in the lucrative government market. Beijing requires Chinese brands account for no less than 50 percent of government vehicles.

Geely has become one of China's largest private carmakers since launching its auto manufacturing business in 1997. It has an annual production capacity of 300,000 cars. It hopes to boost sales to two million vehicles by 2015.

AFP/The Local (news@thelocal.se)

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Your comments about this article

14:28 September 14, 2010 by 2394040
They should be able to sell that many and probably more. I saw some interesting figures in an article last year. Out of a population of 1.1 billion, China had around 400 million who are doing very well indeed money-wise. Of course, that 400 million was being supported by the sweat of 700 million who aren't doing so well.

But if you read a lot of history, this has always been the case. A very few have always lived comfortably off the efforts of very many. As the saying goes: the more things change, the more they remain the same.
22:21 November 28, 2010 by Alberto22
I think the Chinese will push for more quantity then quality. Look at their other products. As time goes by, they will probably make Volvo less European and more Chinese. Want they want is brand recognition, especially in the luxury car markets. I really would consider a Volvo, but the more I see of the Chinese's intrusiveness, the less I'm inclined.

PS. In this same medium I saw an issue about the uproar about selling Swedish weapons to Iraq. Why is it ok to sell a good civilian company like Volvo to the Chinese Communists?
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